Economy, Domestic Economy
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Iran Looks to Expand Regional Trade

Iran Looks to Expand Regional TradeIran Looks to Expand Regional Trade

Iran finds neighboring Iraq its closest ally in the Arab world as well as a big market for its domestically produced goods, including fresh milk and antibiotics.

Once bitter enemies, non-Arab Iran and Arab Iraq were brought closer by the 2003 toppling of Iraqi dictator Saddam Hussein, reads a Financial Times article. Excerpts follow:

“Iraq needs everything, which makes it the best market for Iranian-made goods,” says Yahya Ale Es’haq, the head of Iran-Iraq Chamber of Commerce.

This is while the UAE, the top trade hub in the region, is Iran’s first destination for its reexports.

Last year, Iran reached an agreement with major powers—the US, UK, France, Russia, China and Germany—to scale back its nuclear program in return for a lifting of economic sanctions, and now Iranian businessmen regularly host western and Asian trade delegations.

Businesspeople in Tehran argue that Iran is no longer just a market of its 78 million-strong population; it should be seen as a market of more than 300 million people thanks to its location, allowing access to Arab states in the south and west; Central Asia in the north; and Afghanistan and Pakistan in the east.

Ale Es’haq says Iran can position itself as a conduit to Iraq.

“We can work with European partners who are not familiar with the Iraqi market and are worried about security there. They can rely on us because thanks to our historical and cultural commonalities, we can operate in Iraq better.”

From Iran’s $42.4 billion of non-oil exports in the last Iranian year (which ended on March 19), $6.2 billion went to Iraq and about $4.9 billion worth of non-oil goods were reexported through the UAE.

Iranian businessmen speak of a day when they can exploit their country’s geostrategic position to export to many more Middle Eastern markets.

For now, however, other than with Oman, to which Iran exported $375 million of goods, trade with other Persian Gulf states, Lebanon, Syria and North African Arab states remains insignificant.

The tensions with Saudi Arabia affect Iran’s economic ties with other Arab states closely linked to Tehran. According to a senior Iranian banker, Emirati banks are more reluctant to deal with Iranian businessmen since Riyadh cut ties with Tehran.

However, now that western sanctions are being lifted, Iranian companies are less dependent on the Dubai route for transportation.

Imports from the UAE amounted to $7.8 billion during the last Iranian year, down from $12.1 billion the previous year.

“If Iran and oil-rich Arab states put capabilities together, a very good market can be created for production and trade to meet demands in Arab states, Central Asia, as well as Afghanistan and Pakistan,” says Masoud Daneshmand, chairman of a department of the Iran Chamber of Commerce, which deals with UAE trade.

One market that Iran is hoping to benefit from in the future is Syria. When the Syrian war ends, Syria—like Iraq—is going to be a vast market. The country will have to be reconstructed from scratch. No one, however, is predicting that the war is about to end.

Financialtribune.com